Reflections on HUM, NEO, and LETS

What was really surprising about Bibian Bovet, the trans-sexual former prostitute, eventually rejected municipal political candidate, and, most startling of all, advocate of a new currency, was that she surfaced in Montreal. She would have appeared a far less astonishing arrival in Vancouver, where even her ideas about barter and currency innovation would have seemed less remarkable to locals already using a currency of their own called Seedstock.

British Columbia has long been the favoured destination of colourful people with unconventional ideas, afflicted by what I call HUM, or Harmless Utopian Madness. Harmless, because not advocating subversion or violence; utopian, not because all the unconventional ideas are foolish, but because they are advanced with little sense of the world’s vast indifference; madness, because even what are begun as highly rationalist political or economic programs take on the character of lifelong religious obsessions. The B. C. HUM tradition was launched by the provincial Premier of the 1870s, Amor de Cosmos, prospector, entrepreneur, journalist, and orator, who was declared insane in his last years. Ever since, HUM, while found worldwide, has in B. C. reached almost Californian proportions. It lives in small Vancouver bookstores, in little colonies in the interior, and even in occasional grand conferences. And one of the permanent manifestations of HUM is the pursuit of the good society through some heterodox reform of banking and currency.

These schemes become more significant in eras of broad and deep discontent with capitalism. The odd HUM even turns into a real political force. In 19th century France, the followers of the unworldly Henri de Saint-Simon, who strangely imagined himself a disciple of Isaac Newton, first turned themselves into a mystical sect, devoted to bringing about a ‘marriage’ between the ‘male’ civilization of Europe and the ‘female’ one of Asia. That meant they gave passionate early support to the development of transportation networks, including both the building of railways and of the Suez Canal. The white-robed, groupie-trailing Saint-Simonian guru, Prosper Enfantin, started out as the Son of God and ended as president of a railway company. Europe and America have provided several more recent examples of individuals who went from HUM to highly successful careers as entrepreneurial capitalists.

Furthermore, most economic HUM, even of the clearly crank variety, has still held a certain amount of insight. Not everything argued by the Single-Taxer Henry George, the Social Crediter Major Douglas, or the Nobel-Prize-winning Oxford Chemist, Frederick Soddy, was pure folly. But while even less-known to the Canadian general public, the most durable, intellectually respectable, and interesting economic HUM has been that of the followers of the German businessman, anarchist, and economic thinker, Silvio Gesell (1862-1930). The B. C. interior even used to have a colony dedicated to following the principles of NEO – the Natural Economic Order – the English title of Gesell’s most important book – and other such colonies are sprinkled all over the earth.

Gesell began a successful career as a businessman and financier in Buenos Aires in the 1880s, and moved back and forth between Germany, Argentina, and Switzerland throughout his life. He was almost ruined in a terrific Argentinian crash of 1890 and the subsequent long depression, and was led to reflect long and hard on the nature of banking, interest, and national currencies.

Even economically literate present readers may have scarcely heard of Gesell, or at most recall him faintly from a brief reference in a history of economic thought. But even a brief web consultation shows that he was never regarded by academic professionals in economics as a crank and complete outsider, in the manner of George or Major Douglas. The complete text of The Natural Economic Order can be found on the web, and on its original English publication, it was praised by a substantial array of famous economists, including two Nobel Prize winners. Not only that, Maynard Keynes gave an admiring summary of Gesell’s ideas in his General Theory.

The summary can be found on the web as well. Keynes described Gesell as a ‘strange, unduly neglected prophet who only just failed to reach down to the essence of the matter’. He also recognized HUM on the way: ‘Gesell…became the revered prophet of a cult with many thousand disciples throughout the world…Since his death in 1930, much of [this] peculiar type of fervour…has been diverted to other in my opinion less eminent prophets…I believe that the future will learn more from the spirit of Gesell than from that of Marx.’ He also thought that Gesell’s work was not really complete, and he pointed out some weaknesses, but still pronounced the main principles as sound.

Gesell’s big idea was that interest on money sets a limit on the growth of real capital. Money is different from other assets because of its absence of ‘carrying costs’, and can be kept out of productive use. Keynes agreed with Gesell that the overall rate of interest over centuries of time had been shown to be remarkably stable. He also thought there was nothing wrong in principle with Gesell’s proposal of ‘stamped’ currency: notes which had to be regularly updated by weekly buying and affixing stamps for some agreed fraction of their face value, preventing banks and other money holders from storing value merely by sitting on their holdings. The idea was also tried in 1930s Alberta by the Aberhart Social Credit government, but had this swiftly disallowed by the Canadian federal government. The inconvenience of the procedure never made it any overpowering rival of ordinary national currencies, but Gesell’s additional proposal for a kind of communitarian anarcho-capitalism was more successful In fact, Switzerland has had a functioning community bank of this kind since 1934, called ‘WIR’; Bibiane Bovet cited its example in her letter to investors.

Gesell and several similar English, French, Belgian and German interwar economic theorists were largely successful businessmen. engineers, or scientists, often broadly educated, but with limited academic credentials. However, they all understood something vital about currencies that is sometimes forgotten by Wall Street megabankers and distinguished professors, which is that the way currencies function as either a store of value or a medium of exchange depends ultimately on trust. While his ideas attracted thousands of people worldwide in the 1930s, they stayed in the realm of HUM because of factors like the rise of the dictators, another World War, and then the bipolar Cold War that followed.

But what has been happening since the 1990s has been something new in the long history of LETS (‘Local Exchange Trading Systems‘). Steadily improving computer hardware and software available to individuals have already led to a huge proliferation of alternative currencies, now electronic, for every purpose from computer gaming to shopping for produce. Currencies are coming to be recognized as ‘brands’, that can be competitively assessed. So the prophecy of Keynes that the world would eventually owe more to the spirit of Gesell than the spirit of Marx may finally be coming true. And Ms. Bovet, despite sounding a bit weird, and having troubles with the Financial Markets Authority, may yet turn out to be one of the prophets of tomorrow’s world.